Your Salary and Taxes

Most people know in the back of their minds that they don't really make the money that is sited as their salary compensation amount. And the reason we don't sit and compare apples with apples on this issue is simple: We don't want to know the truth. It's easier to just gloss over it and we do that by stating "take home pay" is different, or "after taxes" is what my paycheck reflects. But, it is in these hard economic times that we are looking at the real numbers and coming up short. Now, we suddenly have the time to say: "But, I thought I was making a good living". And maybe you were or maybe not.

I had always thought it was fishy when you had to fill out any loan applications and they seemed to ask for what you made for gross wages only. Recently the lenders are starting to get a clue and have revamped these qualifications. While the cunning out there have figured ways to get out of paying a dime in taxes when it comes tax season, and they will actually make closer to their gross amount. But the honest bunch of folks who really are paying taxes required (that someone is telling them is the right thing to do) are making around 20% to 30% less than what there gross earnings are. That's a big difference when you look at yearly salaries:

$ 35,000.00 X 25% = $ 8,750.00

This person is really making $ 26,250.00 that's quite a difference in qualifying terms.

It is also a big difference when you break it down for spending.

For each $10.00 that you earn at a job, you will receive roughly $7.50.

Now, at the end of the year maybe you can cut your taxes down a bit with some mortgage deductions and a few other big deductions (over $5,000.00). Or you may be able to deduct some medical expenses, student expenses, etc. and come up with some more to shave off your tax bill. But unless you are talking about thousands of dollars in deductions you are still looking at the 25% to 30% figures.

This is an estimate and your numbers may differ but, I am just trying to point out that until we start calling the real figures into play, we are deceiving ourselves. The closer you get to not having ends meet, the more important these "little deceiving annoyances" can have a big impact.